The Niemann-Pick, Type C1 protein (NPC1) is required for the transport of lipoprotein-derived cholesterol from lysosomes to endoplasmic reticulum. The 1278-amino acid, polytopic membrane protein has not been purified, and its mechanism of action is unknown. Unexpectedly, we encountered NPC1 in a search for a membrane protein that binds 25-hydroxycholesterol (25-HC) and other oxysterols. A 25-HC-binding protein was purified more than 14,000-fold from rabbit liver membranes and identified as NPC1 by mass spectroscopy. We prepared recombinant human NPC1 and confirmed its ability to bind oxysterols, including those with a hydroxyl group on the 24, 25, or 27 positions. Hydroxyl groups on the 7, 19, or 20 positions failed to confer binding. Recombinant human NPC1 also bound [(3)H]cholesterol in a reaction inhibited by Nonidet P-40 above its critical micellar concentration. Low concentrations of unlabeled 25-HC abolished binding of [(3)H]cholesterol, but the converse was not true, i.e. unlabeled cholesterol, even at high concentrations, did not abolish binding of [(3)H]25-HC. NPC1 is not required for the known regulatory actions of oxysterols. Thus, in NPC1-deficient fibroblasts 25-HC blocked the processing of sterol regulatory element-binding proteins and activated acyl-CoA:cholesterol acyltransferase in a normal fashion. The availability of assays to measure NPC1 binding in vitro may further the understanding of ways in which oxysterols regulate intracellular lipid transport.